Thus far, we have explored the properties of inorganic aqueous solutions and of bulk water. Yet cells and biological systems are not comprised of simple homogeneous solutions or bulk aqueous phases. We have emphasized that a fundamental conceptual and structural aspect of biological organization is the cell membrane. Cells are defined physically and functionally in relationship to their environment by the cell membrane. The organization of biological systems, and certainly eukaryotic cells, depends on compartmentalization of cellular functions. This compartmentalization, which allows varied microenvironments to exist in close proximity, is dependent on the membranes that constitute the boundaries of the compartmentalized organelles. Virtually all biological membranes are comprised of lipid molecules arranged in bilayers, with inserted or attached protein and carbohydrate molecules playing a variety of roles at or in the lipid phases. While membranes can be formed from a wide variety of polymeric substances including proteins and carbohydrates, biological membranes are generally comprised of lipid molecules which form the membrane structure itself. Although membranes in cells are comprised primarily of hydrophobic lipid elements, they almost always separate two phases whose predominant species is water. Generally, these aqueous-dominated phases are treated as aqueous solutions. Biological membranes are characterized as being permeable to some but not to all of the components of these solutions. The arrangement of these aqueous–lipid–aqueous “phases” leads to a generalized mechanism through which the cell can perform a wide variety of tasks that allow it to sense, judge, and respond to its environment. In other words, the membrane not only defines where the cell as “self” and the environment as “not self” begins and ends, but also it allows the cell to collect information and energy from the environment, process these inputs, and respond in a variety of output patterns. The membrane either is active in or is the site of action for physical separation and protection; mediation of the flow of chemical species into and out of the cell; accumulation and conversion of energy and electric charge for the cell; and information processing and exchange between cellular elements and the environment, both local and remote. How can we understand membrane formation? We start by exploring the interactions of water with nonpolar molecules and then focus on certain biophysical and biochemical aspects of lipid membrane formation from which a more complete description of the cell can eventually emerge.